Thursday 1 December 2016

Who wants free trade?

Where is the origin of free trade? I think the idea of free traded started centuries ago, but the the era of colonisation was partially developed from this idea. The European countries definitely benefited from colonization via free trading with their colonies; however, after the second world, the colony system broke down, the European countries were forced to or voluntarily give up their controls over their colonies. What happened that caused them to give up their colonies? Now many developing countries welcome free trade more than those developed countries which initially established many free trade deals worldwide.

China is willing to make free trade deals with almost all the countries around the world, countries like some African and Asian countries too want free trade deals with developed countries in order to boost their economic growth. In the past, the developed countries wanted free trade deals, because they had productive industries and the costs of production in the secondary industries were way lower than their colonies while their colonies can provide very cheap raw materials for their industries. However, nowadays, many developing countries have these machines and lower their costs of production in their secondary industries, their average costs of production are lower than some developed countries due to their cheap labour costs. There are some developed countries that may still want free trade. When developed countries focus on their advanced industries, where many developing countries do not have the matched technologies, they then have their comparative advantages and in the advanced industries they have lower costs of production.

Overall, the countries which have lower costs of production in their major industries will want free trades.

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